(Editor’s Note: This is part one of a two-part article.)

    The landscape of the forest products industry is changing, and it may change rather dramatically in the years to come. How is it changing, and what are the potential impacts on the pallet and sawmill industries and other members of the industry?

    The SmallWood conference underscores the recent change in the industry. The biennial conference, devoted to various issues related to small diameter trees, is relatively new, with the third conference held earlier this year in Richmond, Va.

    This year’s conference brought together a couple of hundred members of the industry or people with some relationship to the industry, including suppliers, academics and researchers, government officials, representatives of public agencies, utility companies, loggers and wood products businesses.

    The conference was sponsored by the U.S. Forest Service, the Forest Products Society, and a group of about 20 other government agencies and trade organizations.

    The conference featured remarks and presentations related to such topics as:

    • legislative issues

    • recycling urban trees, antique timbers and used pallets

    • biomass energy power

    • wood fuel pellets

    • heating schools with wood

    • biofuels

    • woody biomass grants

    • handling hurricane debris

    • harvesting small diameter trees

    • invasive species

    • business successes

    • market strategies and products

    • round wood

     Mark Rey, under secretary of the U.S. Department of Agriculture, noted advances in utilization of biomass, including material from forests. American forests provide the largest source of renewable fuel, surpassing hydro-electric power and other sources. However, only about 3% of U.S. energy consumption is provided by biomass, and the leading type of biomass used to produce energy is corn.

    In the same vein, Liam Leightley of Mississippi State University discussed the need to create a sustainable economy that can use forest-based biomass for energy. Strategically, the U.S. needs to reduce its dependence on oil, which it can do in part by using more forest biomass for energy. The market for biomass energy is emerging, he suggested, and the biggest opportunity in the future will center on converting wood fiber into liquid fuel products. At the same time, pulp consumption in the South is declining, and lumber demand is declining although the market share for engineered wood is up.

    Richard Bain of the National Renewable Energy Lab in Golden, Col., noted the administration’s goal of reducing oil imports from the Middle East by 25% in 2025. The U.S. Dept. of Energy has a corollary goal of replacing 30% of gasoline consumption with biofuels by 2030, the so-called 30/30 goal of President Bush’s Advanced Energy Initiative. The U.S. has a potential of 1 billion tons of wood biomass available, which could displace 50-70% of our gasoline usage. For now, the federal government still remains focused heavily on domestic oil production and research subsidies. However, Section 210 of the Energy Policy Act of 2005 allows for two new grant provisions, one for subsidized purchases of woody biomass fuels and another allowing for grants that improve or increase use of woody biomass fuels.

    Harry Cullinan of Auburn University discussed the U.S. pulp and paper industry and predicted it will move long-range into chemical refining. As more paper manufacturing capacity comes on line and expands in Asia, American paper companies will modify their pulp mills to convert more pulp into other products, like chemicals he said. In effect, they will become bio-refineries, extracting new value and recovering and refining products from the pulp waste stream. Wood pulp bio-refinery operations can be three times more profitable than pulp production, he noted. A couple of U.S. pulp mills already are moving in this direction.

    This topic of woody biomass refineries and research into biofuels, such as black liquor, and residual chemicals, such as ethanol, was explored by other speakers as well. A woody biomass refinery has the potential to produce 2 billion gallons of ethanol and 600 million gallons of acetic acid annually. The cost to build this type of refinery would be in the millions of dollars, but forest products businesses may be able to collaborate to share some of the initial costs. In addition, the government’s ‘30-30’ agenda would allocate grants to help reduce start-up costs. Current costs to make ethanol from pine and birch wood fiber is roughly $4-10 per gallon, still not competitive with the $2 price of corn ethanol. There is also potential to process woody biomass into charcoal, fertilizer and other products.

    Several speakers described the success of plants that use wood for fuel and produce heat, steam, power and other products. For example, John R. Dunn of the Department of Agriculture’s director of cooperative research management, touted the effectiveness of the ‘Fuels for Schools’ initiative. He referred to the successful experience of several Mid-Western and Northeastern school districts that converted to pellet fuel systems for heat, which also helps sustain rural economies.

    Michael Burns of Market Street Energy Co., a utility serving St. Paul, Minn., told how the public service district uses wood for fuel and produces heat, hot water, chilled water, and power. The plant, located in the downtown area, consumes about 1,000 tons of wood waste grindings daily that are delivered to the facility. The wood fiber burns cleanly, and its downtown location reduces distribution (piping) costs to homes and businesses. A typical wood-burning power plant produces 33% power and generates 67% waste, he said; the Minnesota utility produces 30% power, 45% steam and only 25% waste.

    The plant is very cost-effective with low utility bills to users. And power reliability is improved because the power is distributed locally, and there are no long-distance transmission lines.

    Ruth Logsdon of Cox Interior in Campbellsville, Ky., spoke about her company’s co-gen plant, which originally was developed as an alternative to landfilling wood waste. The plant produces energy and steam, and the company uses both, saving about $5 million annually.

                (Editor’s Note: Part two of this article will be published in the October issue of Pallet Enterprise.)